Spring’s strong housing market doesn’t seem to be an aberration of our tepid winter. The pending-home sales index shows demand is strong. In this week’s Friday Five, we take a closer look at those numbers, a prediction for the next hot real estate markets, and more.
Wall Street Journal: Housing’s Boost: Time to Stop Blaming Weather?
For months, economists have mused over whether the surprisingly strong start to the spring housing market has come from an unseasonably warm winter that simply led buyers back into the market earlier than usual. But Wednesday’s report on pending-home sales shows that housing demand hasn’t eased heading into the traditional peak buying season, despite an early start to the spring, the economic storm clouds in Europe, and a slower rate of job growth at home.
Business Insider: Small Cities Will Be the Best Housing Markets for Next 20 Years
During the housing bust, two hypotheses made the rounds. The first one stated that the American attachment to home ownership is over. The second one was home owners will eschew suburbs in favor of the convenience and vitality of urban living. I don’t believe either of these to be true. People are practical and know that buying, when factoring in today’s historically low mortgage rates, is currently more affordable than it has been in several decades, and that buying is currently a much better deal than renting in many metros across the country. And my best guess is that the biggest winners in the housing market two decades from now are going to be small- to mid-sized cities.
Herald-Tribune: Household Formation and Jobs are Keys to Housing Market
In the early 2000s, which was a “normal” time in the American housing market, more than 1.3 million households were formed each year. But in the past five years, only about 590,000 households have been formed annually as the Great Recession has lingered and the real estate market collapsed. “There’s been a sharp increase in the number of young adults living with Mom and Dad. That isn’t a sustainable lifestyle for either the mom or the kid,” said David Crowe, chief economist for the National Association of Home Builders. “Something has to change, but we need jobs and the number of jobs has been slow to increase.”
Time: Can the Economy Get Healthy Without a Housing Recovery?
This spring has been filled with disappointing economic news, but one bright spot has been the possible bottoming out of the housing market. The conventional wisdom is that a stable housing market is important not only because housing as an industry takes up a large part of the nation’s yearly output but also because the home is most Americans’ largest source of wealth. Rising home prices, or even the absence of falling home prices, would go a long way to motivate the American consumer to feel more confident.
Pittsburgh Tribune-Review:More Documentation Needed for Loan Approval Today
Strict rules now used by lenders to qualify home buyers for mortgages are a direct result of the relaxed requirements during the housing boom in the mid-2000s that led to the Great Recession and millions of foreclosures. Now it’s more difficult to loan get approval than in the past. A new federal agency — the Consumer Financial Protection Bureau — is attempting to add clarity to the process and help potential home buyers understand and evaluate the costs and information needed to obtain a mortgage.
Friday Five will be on hiatus July 6, 2012, but will return on July 13, 2012.